The Bank Recovery and Resolution ( No. 2) Order 2014

Article 226

SCHEDULE 3 U.K. Amendments

PART 1 U.K. Amendments of FSMA

Amendments of FSMA U.K.

1.  FSMA is amended as follows.

Recovery plans U.K.

2.—(1) Section 137J M1 (rules about recovery plans: duty to consult) is amended as follows.

(2) In subsection (1) for “each”, in both places where it appears, substitute “ a ”.

(3) For subsections (2) to (5) substitute—

“(2) “Relevant person” means—

(a) an institution authorised in the UK; or

(b) a qualifying parent undertaking within the meaning given by section 192B M2 .

(3) A “recovery plan” is a document which provides for measures to be taken—

(a) by an institution authorised in the UK which is not part of a group, following a significant deterioration of the financial position of the institution, in order to restore its financial position; or

(b) in relation to a group, to achieve the stabilisation of the group as a whole, or of any institution within the group, where the group or institution is in a situation of financial stress, in order to address or remove the causes of the financial stress and restore the financial position of the group or institution.

(4) For the purposes of subsection (3)(a) the definition of “group” in section 421 applies with the omission of subsection (1)(e) and (f) of that section.”.

(4) In subsection (6), after the definition of “authorised person”, insert—

““institution” means—

(a)

a credit institution within the meaning given by Article 2.1(2) of Directive 2014/59/EU of the European Parliament and of the Council of 15th May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms M3 ; or

(b)

an investment firm within the meaning given by Article 2.1(3) of that directive;

“institution authorised in the UK” means an institution which is an authorised person and—

(a)

a bank within the meaning given by section 2 of the Banking Act 2009 M4 ;

(b)

a building society within the meaning given in section 119 of the Building Societies Act 1986 M5 ; or

(c)

an investment firm within the meaning given by section 258A M6 of the Banking Act 2009;”.

Marginal Citations

M1 Section 137J was substituted by the Financial Services Act 2012, section 24(1).

M2 Section 192B was inserted by the Financial Services Act 2012, section 27. For Condition C (a parent undertaking must be a financial institution of a prescribed kind (section 192B(4)) see S.I. 2013/165.

M3 OJ No. L 173, 12.6.2014, p. 190.

M4 Section 2 was amended by the Financial Services Act 2012, sections 101(1) and (3) and 102(1) and (3) and Schedule 17, paragraph 3, and by S.I. 2011/2832.

M5 1986 c. 53.

M6 Section 258A was inserted by the Financial Services Act 2012, section 101(1) and (7). See S.I. 2014/1832, which was made under subsection (2)(b). No other order has been made under that subsection.

Rules about resolution packs: duty to consult U.K.

3.—(1) Section 137K M7 (PRA rules about resolution plans: duty to consult) is amended as follows.

(2) In subsection (1)—

(a) for the words “the PRA”—

(i) where they first appear, substitute “either regulator”;

(ii) where they appear after “resolution plan,”, substitute “ the regulator ”; and

(b) for the word “each”, in both places where it appears, substitute “ a ”.

(3) In subsections (1) and (3) for “resolution plan” substitute “ resolution pack ”.

(4) For subsection (2) substitute—

“(2) “Relevant person” has the same meaning as in section 137J(2).”.

(5) After subsection (6) insert—

“(7) In this section “authorised person”, in relation to the PRA, means PRA-authorised person.”.

(6) Accordingly, for the heading substitute “ Rules about resolution packs: duty to consult ”.

Marginal Citations

M7 Section 137K was substituted by the Financial Services Act 2012, section 24(1).

Special provision relating to adequacy of resolution plans U.K.

4.  Section 137M M8 (special provision relating to adequacy of resolution plans) is repealed.

Marginal Citations

M8 Section 137M was substituted by the Financial Services Act 2012, section 24(1).

Recovery plans and resolution packs: restriction on duty of confidence U.K.

5.—(1) Section 137N M9 (recovery plans and resolution plans: restriction on duty of confidence) is amended as follows.

(2) For the words “resolution plan”, wherever they appear, substitute “ resolution pack ”.

(3) In subsection (2) after “authorised person” insert “ or a qualifying parent undertaking ”.

(4) In subsection (3)(a) and (b) for “that plan” substitute “ that plan or pack ”.

(5) In subsection (5) after the definition of “authorised person” insert—

““qualifying parent undertaking” means—

(a)

a qualifying parent undertaking within the meaning given by section 192B; or

(b)

an undertaking which—

(i)

is a parent undertaking of an institution (within the meaning given in section 137J(6) M10 ) authorised in another EEA State; and

(ii)

would be a qualifying parent undertaking within the meaning given by section 192B if the institution were a qualifying authorised person within the meaning given by section 192A(1) M11 .”.

(6) Accordingly, in the heading for “resolution plans” substitute “ resolution packs ”.

Marginal Citations

M9 Section 137N was substituted by the Financial Services Act 2012, section 24(1).

M10 Subsection (6) of section 137J is amended by paragraph 2(4) of this Schedule.

M11 Section 192A was inserted by the Financial Services Act 2012, section 27.

PART 2 U.K. Amendments of other primary legislation

Amendment of the Financial Services (Banking Reform) Act 2013 U.K.

6.  In section 17 of the Financial Services (Banking Reform) Act 2013 M12 (bail-in stabilisation option)—

(a) in subsection (3)(e) for “bail-in administrator” substitute “ resolution administrator ”;

(b) in subsection (5)—

(i) omit the definition of “bail-in administrator”;

(ii) after the definition of “company” insert—

““resolution administrator” is to be read in accordance with sections 62B to 62E of the Banking Act 2009.”.

Marginal Citations

M12 2013 c.33.

PART 3 U.K. Amendments of secondary legislation

Financial Markets and Insolvency (Settlement Finality) Regulations 1999 U.K.

7.  In the Financial Markets and Insolvency (Settlement Finality) Regulations 1999 M13 , in regulation 2(2), after sub-paragraph (b) insert—

“(2A) For the purposes of these regulations, references to insolvency proceedings do not include crisis prevention measures or crisis management measures taken in relation to an undertaking under the recovery and resolution directive unless—

(a) express provision is made in a contract to which that undertaking is a party that crisis prevention measures or crisis management measures taken in relation to the undertaking are to be treated as insolvency proceedings; and

(b) the substantive obligations provided for in the contract containing that provision (including payment and delivery obligations and provision of collateral) are no longer being performed.

(2B) For the purposes of paragraph (2A)—

(a) “crisis prevention measure” and “crisis management measure” have the meaning given in section 48Z of the Banking Act 2009 M14 ; and

(b) “recovery and resolution directive” means Directive 2014/59/EU of the European Parliament and of the Council of 15th May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms.”.

Marginal Citations

M13 S.I. 1999/2979. There are amendments, but none is relevant.

M14 Section 48Z was inserted by S.I. 2014/3329.

Financial Services and Markets Act 2000 (Disclosure of Confidential Information) Regulations 2001 U.K.

8.—(1) The Financial Services and Markets Act 2000 (Disclosure of Confidential Information) Regulations 2001 M15 are amended as follows.

(2) In regulation 2 M16 —

(a) in the definition of “single market restrictions” after paragraph (l) add—

“(m) articles 84 and 98 of the recovery and resolution directive;”; and

(b) in the appropriate place insert—

““EEA resolution authority” means an authority designated by another EEA state in accordance with Article 3 of the recovery and resolution directive;”;

““foreign resolution authority” means an authority in a territory which is not, and does not form part of, an EEA state which exercises functions in relation to third-country resolution action (within the meaning of section 89H of the Banking Act 2009), including planning for such action, corresponding to one or more functions exercisable by an EU resolution authority pursuant to the recovery and resolution directive;”;

““recovery and resolution directive” means Directive 2014/59/EU of the European Parliament and of the Council of 15th May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms; ”;M17

““recovery and resolution directive information” means confidential information received by—

(a)

the Bank of England in the course of discharging its functions as a resolution authority under the recovery and resolution directive;

(b)

the FCA or PRA in the course of discharging their functions as competent authorities under the recovery and resolution directive;

(c)

a person appointed by the Bank of England under section 62B (resolution administrator) of the Banking Act 2009 M18 to act as resolution administrator in the course of discharging that person's functions as such;”.

(3) In regulation 8 M19 —

(a) at the end of paragraph (b) omit “and”; and

(b) at the end of paragraph (c) insert—

“; and

(d) recovery and resolution directive information.”.

(4) In regulation 9 M20 —

(a) in paragraph (1), for “and (4)” substitute “ (4) and (5) ”;

(b) in paragraph (2) for “the condition in paragraph (2ZA) is met or the conditions in (2B) are met” substitute “ the conditions in paragraphs (2ZA), (2B) or in paragraph (2C) are met ”; and

(c) after paragraph (2B) insert—

“(2C) The condition in this paragraph is that the conditions in Article 98 of the recovery and resolution directive for the exchange of information with authorities in a third country are met.”; and

(d) after paragraph (4), insert—

“(5) Paragraph (1) does not permit the disclosure of recovery and resolution directive information to any person unless the assessment required in regulation 10B has been carried out.”.

(5) After regulation 10, insert—

“Disclosure of recovery and resolution directive information

10A.— (1) The Bank of England may disclose recovery and resolution directive information to any person for the purpose of enabling the Bank to prepare for and carry out the functions given to it under—

(a) Parts 1, 2 and 3 of the Banking Act 2009, or

(b) the Investment Bank Special Administration Regulations 2011 M21 ,

provided that any such disclosure is made subject to the conditions in paragraph (2), and following the assessment required in regulation 10B.

(2) A disclosure made by the Bank of England under paragraph (1) must be made subject to—

(a) a requirement that the information disclosed is kept confidential and not disclosed to any other person without the consent of the Bank; and

(b) restrictions imposed by the Bank as to the way in which the information may be used.

(3) A resolution administrator appointed under section 62B of the Banking Act 2009 may disclose recovery and resolution directive information to a regulator.

Assessment of effects of disclosure

10B.— (1) Before any disclosure is made of recovery and resolution directive information the person disclosing that information must—

(a) assess the possible effects of disclosing the information in question on—

(i) the public interest in relation to financial, monetary or economic policy;

(ii) the commercial interests of natural and legal persons;

(iii) the purpose of any investigation, inspection or audit to which the information is relevant; and

(b) where the information in question relates to the recovery plan or resolution plan of any undertaking, assess the effects of the disclosure of any part of that recovery plan or resolution plan.

(2) In this regulation—

“recovery plan” means a recovery plan drawn up and maintained in accordance with Article 5 of the recovery and resolution directive or a group recovery plan drawn up and maintained in accordance with Article 7 of that directive; and

“resolution plan” means a resolution plan drawn up in accordance with Article 10 of the recovery and resolution directive or a group recovery plan drawn up in accordance with Articles 12 and 13 of that directive.”.

(6) In regulation 11 M22 after paragraph (f) insert—

“(g) recovery and resolution directive information.”.

(7) In Schedule 1 M23 —

(a) in Part 1—

(i) after the entry beginning “The Bank of England” in the first column insert “ The Bank of England ”, and in the second column insert “ Its functions under Parts 1, 2 and 3 of the Banking Act 2009 and under the Investment Bank Special Administration Regulations 2011 M24 ”;

(ii) in the entry beginning “An official receiver appointed under section 399 of the Insolvency Act 1986”, in the second column after paragraph (ii) insert “ or (iii) banking group companies (as defined in section 81D of the Banking Act 2009) M25 ”;

(iii) after the entry beginning “An official receiver appointed under section 399 of the Insolvency Act 1986” in the first column insert “ A person appointed in judicial or administrative proceedings in an EEA State or a State which is not an EEA State, pursuant to a law relating to insolvency, to administer the reorganisation or the liquidation of a debtor's assets or affairs ”, and in the second column insert “ That person's functions as such ”;

(iv) in the entry beginning “An auditor of an authorised person”, in the first column after “authorised person” insert “ or banking group company (as defined in section 81D of the Banking Act 2009) ”;

(v) after the entry beginning “An auditor of an authorised person” in the first column insert “ A person appointed to carry out a statutory audit of a company within the meaning of Article 2.1 of Directive 2006/43/EC of the European Parliament and of the Council of 17th May 2006 on statutory audits and consolidated accounts M26 ”, and in the second column insert “ That person's functions as such ”;

(b) in Part 2—

(i) after the entry for “An EEA regulatory authority” in the first column insert “ An EEA resolution authority ”, and in the second column insert “ Its functions under the recovery and resolution directive ”;

(ii) after the entry for “An EEA resolution authority” (inserted by sub-paragraph (i)) in the first column) insert “ An authority responsible for maintaining the stability of the financial system in an EEA State through macro-prudential regulation ”, and in the second column insert “ Its functions as such ”; and

(c) in Part 3 after the entry for “A non-EEA regulatory authority” in the first column insert “ A foreign resolution authority ”, and in the second column insert “ Its functions as such ”.

Marginal Citations

M15 S.I. 2001/2188.

M16 Amended by S.I. 2003/693, 2003/2066, 2004/1862, 2004/3379, 2006/3413, 2010/2628, 2012/916, 2012/917, 2012/2554, 2013/472 and 2013/1773.

M17 OJ No. L 173, 12.6.2014, p. 190.

M18 Section 62B was inserted by S.I. 2014/3329.

M19 Regulation 8 was amended by S.I. 2003/504, 2006/3413 and 2012/916.

M20 Regulation 9 was amended by S.I. 2003/693, 2004/3379, 2006/3221, 2006/3413, 2010/2628, 2011/1613, 2012/916, 2013/472, 2013/1773 and S.I. 2013/3115.

M21 S.I. No. 2011/245.

M22 Regulation 11 was amended by S.I. 2003/2066, 2006/3413, 2011/1613, 2012/916 and 2013/504.

M23 Schedule 1 was amended by S.I. 2001/3437, 2001/3624, 2003/2174, 2003/2817, 2005/3071, 2006/3413, 2011/1265, 2012/916, 2013/472, 2013/3115, 2014/549, 2014/883 and 2014/2879.

M24 S.I. 2011/245.

M25 2009 c. 1. Section 81D was inserted by the Financial Services Act 2012 (c. 21), s.100.

M26 OJ No. L 157, 9.6.2006, p. 87.

Financial Collateral Arrangements (No 2) Regulations 2003 U.K.

9.—(1) The Financial Collateral Arrangements (No 2) Regulations 2003 M27 are amended as follows.

(2) In regulation 3 M28 —

(a) in paragraph (1)—

(i) omit the definition of “enforcement event”;

(ii) after the definition of “non-natural person” insert—

““recovery and resolution directive” means Directive 2014/59/EU of the European Parliament and of the Council of 15th May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms.”; and

(b) after paragraph (1) insert—

“(1A) For the purpose of these Regulations—

(a) “enforcement event” means an event of default, or (subject to sub-paragraph (b)) any similar event as agreed between the parties, on the occurrence of which, under the terms of a financial collateral agreement or by operation of law, the collateral taker is entitled to realise or appropriate financial collateral or a close-out netting provision comes into effect;

(b) a crisis management measure or crisis prevention measure taken in relation to an entity under the recovery and resolution directive shall not be considered to be an enforcement event pursuant to an agreement between the parties if the substantive obligations provided for in that agreement (including payment and delivery obligations and provision of collateral) continue to be performed; and

(c) for the purposes of sub-paragraph (b) “crisis prevention measure” and “crisis management measure” have the meaning given in section 48Z of the Banking Act 2009.”.

(3) In regulation 12, after paragraph (4) insert—

“(5) Nothing in this regulation prevents the Bank of England imposing a restriction on the effect of a close out netting provision in the exercise of its powers under Part 1 of the Banking Act 2009.”

(4) After regulation 18 insert—

“Restrictions on enforcement of financial collateral arrangements, etc.

18A.— (1) Nothing in regulations 16 and 17 M29 prevents the Bank of England imposing a restriction—

(a) on the enforcement of financial collateral arrangements, or

(b) on the effect of a security financial collateral arrangement, close out netting provision or set-off arrangement,

in the exercise of its powers under Part 1 of the Banking Act 2009.

(2) For the purpose of paragraph (1) “set-off arrangement” has the meaning given in Article 2.1(99) of the recovery and resolution directive.”.

Marginal Citations

M27 S.I. 2003/3226.

M28 Regulation 3 was amended by S.I. 2010/2993.

M29 Regulations 12, 16 and 17 were amended by S.I. 2010/2993.

Credit Institutions (Reorganisation and Winding up) Regulations 2004 U.K.

10.—(1) The Credit Institutions (Reorganisation and Winding up) Regulations 2004 M30 are amended as follows.

(2) In regulation 2(1) (interpretation)—

(a) in the appropriate place insert—

““recovery and resolution directive” means Directive 2014/59/EU of the European Parliament and of the Council of 15th May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms;”;

““stabilisation instrument” means any of the following—

(a)

a “mandatory reduction instrument” made under section 6B of the Banking Act 2009 M31 ;

(b)

a “resolution instrument” made under section 12A of the Banking Act 2009 M32 ;

(c)

a “share transfer instrument” as defined in section 15 of the Banking Act 2009;

(d)

a “share transfer order” as defined in section 16 of the Banking Act 2009;

(e)

a “property transfer instrument” as defined in section 33 of the Banking Act 2009 M33 ; or

(f)

a “third country instrument” made under section 89H of the Banking Act 2009 M34 ;”;

(b) for the definition of “EEA regulator” substitute—

““EEA regulator” means—

(a)

a competent authority (within the meaning given by point (40) of Article 4(1) of the capital requirements regulation) established in an EEA State; or

(b)

the resolution authority (within the meaning given by point (18) of Article 2(1) of the recovery and resolution directive) established in an EEA State;”;

(c) for the definition of “directive reorganisation measure” substitute—

““directive reorganisation measure” means a reorganisation measure as defined in Article 2 of the reorganisation and winding up directive which was adopted or imposed on or after the 5th May 2004, or any other measure to be given effect in or under the law of the United Kingdom pursuant to Article 66 of the recovery and resolution directive;”; and

(d) for the definition of “the reorganisation and winding up directive” substitute—

““the reorganisation and winding up directive” means Directive 2001/24/EC of the European Parliament and of the Council of 4th April 2001 on the reorganisation and winding up of credit institutions M35 as amended by Article 117 of the recovery and resolution directive;”.

(3) In regulation 3 (prohibition against winding up etc EEA credit institutions in the United Kingdom) after paragraph (7) insert—

“(7A) A stabilisation instrument shall not be made in respect of an EEA credit institution.”.

(4) In regulation 10 (notification to EEA regulators), in paragraph (3) after “it appears to” insert “ the Bank of England, ”.

(5) In regulation 18 (disclosure of confidential information received from an EEA regulator)—

(a) in paragraph (2) for “(3) and (4)” substitute “ (3), (4) and (5) ”;

(b) in paragraph (4) omit “directive”; and

(c) after paragraph (4) insert—

“(5) The sections of the 2000 Act specified in paragraph (2) apply with the modifications set out in section 89L of the Banking Act 2009 M36 where that section applies.”.

(6) In regulation 19 (application of Part 4), in paragraph (1)—

(a) after sub-paragraph (c) delete “or”; and

(b) after sub-paragraph (d) add—

“or

(e) where a stabilisation instrument is made in respect of a UK credit institution.”.

(7) In regulation 21 (interpretation of Part 4)—

(a) in paragraph (1)(b) after “administration, winding up,” insert “ making of a stabilisation instrument ”;

(b) after paragraph (2)(c) delete “and”; and

(c) after paragraph (2)(d) add—

“and

(e) in a case where a stabilisation instrument is made, the date on which that instrument is made,”.

(8) In regulation 29 (regulated markets) for paragraph (2) substitute—

“(2) For the purposes of this regulation “regulated market” has the meaning given by point (21) of Article 4(1) of Directive 2014/65/EU of the European Parliament and of the Council on markets in financial instruments M37 .”.

(9) For regulation 34 (netting agreements) substitute—

“Netting agreements

34.— (1) The effects of a relevant reorganisation or a relevant winding up on a netting agreement shall be determined in accordance with the law applicable to that agreement.

(2) Nothing in paragraph (1) affects the application of—

(a) section 48Z of the Banking Act 2009 M38 ;

(b) section 70C of the Banking Act 2009 M39 ;

(c) Articles 68 and 71 of the recovery and resolution directive or the law of any EEA State (other than the United Kingdom) transposing these provisions; or

(d) any instrument made under the provisions referred to in sub-paragraph (a) or (b).”.

(10) For regulation 35 (repurchase agreements) substitute—

“Repurchase agreements

35.— (1) Subject to regulation 33, the effects of a relevant reorganisation or a relevant winding up on a repurchase agreement shall be determined in accordance with the law applicable to that agreement.

(2) Nothing in paragraph (1) affects the application of—

(a) section 48Z of the Banking Act 2009 M40 ;

(b) section 70C of the Banking Act 2009 M41 ;

(c) Articles 68 and 71 of the recovery and resolution directive or the law of any EEA State (other than the United Kingdom) transposing these provisions; or

(d) any instrument made under the provisions referred to in sub-paragraph (a) or (b).”.

(11) In regulation 36 (interpretation of Part 5), in paragraph (1)(a)—

(a) after paragraph (ii) delete “or”; and

(b) at the end add—

“or

(iv) the making of a stabilisation instrument.”.

(12) In regulation 38 (disclosure of confidential information: third country credit institution)—

(a) in paragraph (3), for “(4), (5) and (6)” substitute “ (4), (5), (6) and (8) ”;

(b) in paragraph (6) omit “directive”; and

(c) after paragraph (7), add—

“(8) The sections of the 2000 Act specified in paragraph (3) apply with the additional modifications set out in section 89L of the Banking Act 2009 M42 where that section applies.”.

(13) After regulation 38 (disclosure of confidential information: third country credit institution) insert—

“PART 6 U.K. Application to Investment Firms

Interpretation of this Part

39.   In this Part—

(a) “EEA investment firm” means an investment firm as defined in point (2) of Article 4(1) of the capital requirements regulation whose head office is in an EEA State other than the United Kingdom; and

(b) “UK investment firm” means an investment firm as defined in subsections (1) and (2)(a) of section 258A of the Banking Act 2009.

Application to UK investment firms

40.   These Regulations apply to UK investment firms as if such firms were UK credit institutions, subject to the modifications set out in this Part.

Application to EEA investment firms

41.   These Regulations apply to EEA investment firms as if such firms were EEA credit institutions, subject to the modifications set out in this Part.

Withdrawal of authorisation

42.   Paragraph (3) of regulation 11 (withdrawal of authorisation) applies to UK investment firms as if the reference in that paragraph to section 55J of the 2000 Act M43 included a reference to any other power of the FCA or PRA under that Act to vary or cancel any permission of a body or firm.

Reorganisation measures and winding-up proceedings in respect of EEA investment firms effective in the United Kingdom

43.   Regulation 5 (reorganisation measures and winding-up proceedings in respect of EEA credit institutions effective in the United Kingdom) applies to EEA investment firms as if, in paragraph (6), the phrase “relevant EEA State” meant the EEA State under the law of which the reorganisation is adopted or imposed, or the winding-up proceedings are opened, as the case may be.

PART 7 U.K. Application to Group Companies

Interpretation of this Part

44.   In this Part—

(a) “EEA group company” means—

(i) a financial institution as defined in point (26) of Article 4(1) of the capital requirements regulation,

(ii) a parent undertaking as defined in point (15)(a) of Article 4(1) of the capital requirements regulation, or

(iii) any other firm within the scope of Article 1(1) of the recovery and resolution directive,

the head office of which is in an EEA State other than the United Kingdom and which is not otherwise subject to these Regulations; and

(b) “UK group company” means—

(i) a financial institution as defined in point (26) of Article 4(1) of the capital requirements regulation that is authorised by the PRA or FCA,

(ii) a parent undertaking as defined in Article 4(1)(15)(a) of the capital requirements regulation, or

(iii) any other firm within the scope of Article 1(1) of the recovery and resolution directive,

the head office of which is in the United Kingdom and which is not otherwise subject to these Regulations.

Application to UK group companies

45.   These Regulations apply to UK group companies with respect to which a stabilisation instrument has been made, as if they were UK credit institutions.

Application to EEA group companies

46.   These Regulations apply to EEA group companies with respect to which one or more of the resolution tools or resolution powers provided for in the recovery and resolution directive have been applied, as if they were EEA credit institutions, subject to the modifications set out in this Part.

Reorganisation measures and winding-up proceedings in respect of EEA group companies effective in the United Kingdom

47.   Regulation 5 (reorganisation measures and winding-up proceedings in respect of EEA group companies effective in the United Kingdom) applies to EEA group companies as if, in paragraph (6), the phrase “relevant EEA State” meant the EEA State under the law of which the reorganisation is adopted or imposed, or the winding-up proceedings are opened, as the case may be.

PART 8 U.K. Application to Third Country Investment Firms

Interpretation of this Part

48.   In this Part “third country investment firm” means an investment firm as defined in point (2) of Article 4(1) of the capital requirements regulation whose head office is not in an EEA State.

Application to third country investment firms

49.   Part 5 of these Regulations applies to third country investment firms as if such firms were third country credit institutions (within the meaning given by regulation 36(1)(b) (interpretation of Part 5)).”.

Marginal Citations

M30 S.I. 2004/1045, as amended by S.I. 2007/108, 2007/126, 2007/830, 2011/1043, 2011/1265, 2013/472 and 2013/3115.

M31 Section 6B was inserted by S.I. 2014/3329.

M32 Section 12A was inserted by the Financial Services (Banking Reform) Act 2013, Schedule 2, paragraphs 1 and 2; and was amended by S.I. 2014/3329.

M33 Section 33 was amended by S.I. 2014/3329.

M34 Section 89H was inserted by S.I. 2014/3329.

M35 OJ No. L 125, 5.5.2001, p. 15.

M36 Section 89L was inserted by S.I. 2014/3329.

M37 OJ No. L 173, 12.6.2014, p. 349.

M38 Section 48Z is inserted by S.I. 2014/3329.

M39 Section 70C is inserted by S.I. 2014/3329.

M40 Section 48Z is inserted by S.I. 2014/3329.

M41 Section 70C is inserted by S.I. 2014/3329.

M42 Section 89L was inserted by S.I. 2014/3329.

M43 Section 55A to 55Z4 were inserted by the Financial Services Act 2012, section 11; and was amended by S.I. 2013/1773 and 2013/3115.

Financial Services and Markets Act 2000 (Prescribed Financial Institutions) Order 2013 U.K.

11.—(1) The Financial Services and Markets Act 2000 (Prescribed Financial Institutions) Order 2013 M44 is amended as follows.

(2) In article 1(2) (interpretation)—

(a) for the definition of “financial holding company” substitute—

““financial holding company” has the meaning given by Article 4(1)(20) of the capital requirements regulation;”;

(b) for the definition of “financial institution” substitute—

““financial institution” has the meaning given by Article 4(1)(26) of the capital requirements regulation;”;

(c) after the definition of “insurance undertaking” insert—

““investment firm” has the meaning given by Article 4(1)(2) of the capital requirements regulation;

“mixed activity holding company” means a parent undertaking which—

(a)

is not a credit institution, an investment firm, a financial holding company or a mixed financial holding company; and

(b)

has at least one subsidiary which is a credit institution or an investment firm;”; and

(d) after the definition of “reinsurance undertaking” insert—

““relevant MAHC” means a mixed activity holding company which has at least one subsidiary which—

(a)

is an institution; and

(b)

is not a subsidiary of a financial holding company which is also a subsidiary of the mixed activity holding company;”.

(3) In article 2 (prescribed financial institutions)—

(a) in paragraph (2) at the end insert—

“(d) a mixed activity holding company for the purposes set out in paragraph (3) and (4);

(e) a relevant MAHC for the purpose set out in paragraph (5).”.

(b) after paragraph (2) insert—

“(3) The first purpose is enabling the FCA or PRA to make rules under section 192JB M45 of FSMA in relation to the provision of financial support to other members of the group of a mixed activity holding company which encounter or are likely to encounter financial difficulties.

(4) The second purpose is enabling the FCA or PRA to make rules which require a mixed activity holding company to notify it that the company is failing or likely to fail (within the meaning given in Article 32.4 of the recovery and resolution directive).

(5) The third purpose is enabling the FCA or PRA to make rules which require a relevant MAHC, in any agreement which creates a liability, to include a contractual term by which a party to the agreement to whom the liability is owed—

(a) recognises that the liability may be subject to the exercise by the Bank of England of power to make—

(i) a mandatory reduction instrument (within the meaning given in section 6B of the Banking Act 2009); or

(ii) a resolution instrument under section 12A, 48U, 48V or 48W of that Act M46 ; and

(b) agrees to be bound by any reduction of the principal or outstanding amount due or by any conversion or cancellation effected by the exercise of that power.

(6) Rules made for the purpose set out in paragraph (5) may not be brought into force before 1st January 2016.”.

Marginal Citations

M44 S.I. 2013/165, as amended by S.I. 2013/3115.

M45 Section 192JB was inserted by the Financial Services (Banking Reform) Act 2013, section 133; and was amended by S.I. 2014/3329.

M46 Sections 12A, 48U, 48V and 48W were inserted of the Financial Services (Banking Reform) Act 2013, Schedule 2, paragraphs 1, 2 and 4; and were amended by S.I. 2014/3329.

Financial Services and Markets Act 2000 (Qualifying EU Provisions) Order 2013 U.K.

12.—(1) The Financial Services and Markets Act 2000 (Qualifying EU Provisions) Order 2013 M47 is amended as follows.

(2) In article 1 after the definition of “EuVECA Regulation” insert—

“recovery and resolution directive” means Directive 2014/59/EU of the European Parliament and of the Council of 15th May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms;”.

(3) In article 2—

(a) in paragraph (4) after sub-paragraph (b) insert—

“(c) any directly applicable regulation made under the recovery and resolution directive.”;

(b) in paragraph (6) after sub-paragraph (d) insert—

“(e) any directly applicable regulation made under the recovery and resolution directive.”; and

(c) after paragraph (8) insert—

“(9) Directly applicable regulations made under the recovery and resolution directive are specified qualifying EU provisions for the purpose of sections 66(2A) and 192K(1)(c) of the Act M48 .”.

(4) In article 3—

(a) in paragraph (2) after sub-paragraph (h) insert—

“(i) any directly applicable regulation made under the recovery and resolution directive.”; and

(b) in paragraph (3) after sub-paragraph (f) insert—

“(g) in relation to a contravention of a requirement imposed by any directly applicable regulation made under the recovery and resolution directive—

(i) if the authorised person concerned is a PRA-authorised person, either the PRA or the FCA;

(ii) in any other case, the FCA.”.

(5) In article 5—

(a) in paragraph (2) after sub-paragraph (h) insert—

“(i) any directly applicable regulation made under the recovery and resolution directive.”; and

(b) in paragraph (5) after sub-paragraph (g) insert—

“(h) in relation to a contravention of a requirement imposed by any directly applicable regulation made under the recovery and resolution directive—

(i) if the person concerned is a PRA-authorised person, or a parent undertaking of a PRA-authorised person, either the PRA or the FCA;

(ii) in any other case, the FCA.”.

(6) In article 6—

(a) in paragraph (2) after sub-paragraph (j) insert—

“(k) any directly applicable regulation made under the recovery and resolution directive.”; and

(b) in paragraph (4) after sub-paragraph (d) insert—

“(e) any directly applicable regulation made under the recovery and resolution directive.”.

Marginal Citations

M47 S.I. 2013/419, as amended by SI 2013/1773.

M48 Section 192K(1)(c) was inserted by S.I. 2014/3329.

Capital Requirements Regulations 2013 U.K.

13.  In the Capital Requirements Regulations 2013 M49 , in regulation 7 (co-operation with EBA) omit paragraph (2).

Marginal Citations

M49 S.I. 2013/3115.